What type of auction involves bidding that starts high and decreases over time?

In a Dutch auction, the bidding begins at a high price, which gradually decreases until a participant accepts the current price or the item is sold. This format is distinct because it aims to stimulate quick decisions from bidders due to the descending price, contrasting with traditional auction types where bidding starts low and increases as participants compete against one another.

Dutch auctions are often used for selling items quickly, such as in the case of perishable goods or in certain online auction platforms where inventory turnover is critical. The method is efficient for both sellers, who may want to expedite the selling process, and for buyers, who benefit from potentially lower prices by waiting for the right moment to bid.

Other auction types operate differently: an English auction has ascending bids, a sealed bid auction involves bidders submitting confidential offers, and a reserve auction has a minimum price that must be met for the item to be sold. Understanding these distinctions highlights why the Dutch auction format is unique and effective for certain selling scenarios.